How smarter investments and scalable technologies can reduce costs across the media industry.
One of the critical changes in the media industry in recent years has been the recognition that service costs are far more complex than they first appear, and that investing in a solution does not end once the contract is signed. Understanding the structure and complexities of Total Cost of Ownership (TCO) is key to gaining a clear financial picture of any technological solution, from initial acquisition through operation, servicing, and on to eventual disposal. Seen through this lens it has become clear that some products, even entire technologies, are anything but cost-effective in the long run.
Equally important for our industry is recognizing that consumers make similar calculations. Maybe not with the same zeal for spreadsheets and analysis as the accounting department, but their desire to save money when the wider economy is underperforming has a profound effect on the business models and technologies that the industry employs and on their chances of success.
As a result, Spending Wiser, one of our main themes for IBC2025, is an essential objective for both improving a company’s operational efficiency, and for translating those savings into more affordable bundles and flexible pricing offered to its end users, the viewers. Consumer behavior is already signalling the importance of this shift, with service stacking (the number of different services that the consumer is prepared to pay for regularly) already falling. Deloitte forecasts that after peaking at an average of four services in the US and 2.4 in Europe, “SVOD stacking has reached its limit and will start declining in 2025.”
This means it’s now more crucial than ever to implement solutions that not only optimize operations but can also allow providers to meet the growing demand for smart and skinny bundles. The key question is: what features should operators prioritize to truly spend wiser?
What to Look For
When choosing solutions, there are definite features that operators should be looking at to reduce costs throughout the lifetime of a product.
Microservices architecture - A collection of small and independent services that enables a modular approach to building solutions. This design allows each component to be independently scaled and updated, which enables a gradual growth strategy and targeted investment as services mature. By moving away from monolithic solutions, companies can save money by provisioning precisely what they need, such as tailoring cloud resources to specific parts of a workflow, while also keeping operational overhead in check.
Cost-effective scaling - We’ve already written about the importance of being able to Scale Smarter, but it is worth reiterating the economic aspects here. Cost-effective scaling is about the optimal provisioning of resources. Instead of over-engineering a solution to handle peak demands that only occur a fraction of the time, cloud-based microservices can operate at a baseline level and rapidly scale when needed. Predictive tools leveraging AI are becoming ever more important for optimizing this resource allocation, ensuring extra capacity is in place ahead of peaks in demand.
Opex vs Capex - An interlinked part of this is the move to an Opex model. As an example, cloud-based services appear on the balance sheet under operational expenses (Opex) rather than capital expenses (Capex). Indeed, this has been one of the main drivers in the rapid adoption of cloud-based solutions across this industry. To choose an obvious example, it is more cost-effective for a business to position ongoing cloud-based storage costs for content under Opex on the balance sheet than it is to find the funds to build a bricks and mortar data centre. At VO we, of course, support both Opex and Capex models, as well as hybrid cloud deployments, allowing businesses to make the choices that best suit their own individual circumstances.
Open source - Software licensing can be a significant cost to many businesses, which is why there is a huge upsurge in the use of open source software in all parts of the industry. Indeed, it has been estimated that 96% of commercial programs include some code created, modified, or distributed for free by public-facing tech forums. Without these often mature code-creation networks, it has been estimated that firms would pay 3.5 times more to build the software and platforms that run their businesses.
Efficient AI - While AI introduces substantial benefits in the shape of speeding up iteration and development, as well as services that improve the end-user experience such as automated subtitles, it's important to be aware that AI models can also be computationally expensive. Efficient AI means choosing right-sized models and deployment strategies that balance performance and time to market with costs.
Spending Wiser Through Technology
Reflecting these industry trends, we prioritize solutions that are designed for maximum operational efficiency and long-term cost-savings, such as DaaS, the Design-as-a-Service component of our TVApps solution. This has the potential to be a significant cost saver. As a no-code solution, it can allow broadcasters and operators to design and update their user interfaces in-house, lowering dependence on what can be costly external development resources and reducing workflow complexity.
It also enables accelerated responsiveness and agility, allowing them to shape the UI to match changing viewer expectations, reflect new content drops, adapt to seasonal changes such as the introduction of Holiday season schedules, and more. All of this can help them to maximize monetization opportunities. Book a demo to see it in action at IBC2025.
Another example is Multi-Brand Operations management (we call it ‘Multi-X’). This cross-platform solution allows video service providers to consolidate and streamline operations across multiple regions, brands, and enterprises. This lets them deliver an experience closely tailored to different audiences from the same unified back-end, reducing the need — and costs associated with — multiple platforms and systems.
Spend Wiser: The Overall Picture
There are other aspects of Spending Wiser that must also be taken into account. For example, it would be a mistake to look solely at the economic outputs (cost savings) alone and not examine the inputs (revenue opportunities). Increasing monetization opportunities is an important part of any budgetary analysis, and from leveraging data to optimize services across the whole technology stack, to deploying Targeted TV Advertising, to increasing viewer engagement, there are multiple options available to companies that can have a beneficial impact on the bottom line, without impairing security and compliance.
Plus, as we have already said, it is important to acknowledge what is happening in the market. Ultimately, the most cost-effective solution is a bundle viewers want to buy. While technology optimizes delivery, content is the primary driver of value. This is where smart content agreements come into play. By moving from rigid, all-or-nothing deals to more flexible, data-driven arrangements, operators can build bundles that reduce licensing costs while remaining valuable to consumers. And by leveraging analytics, operators can make informed decisions about which content is essential and which can be trimmed, directly enabling the creation of attractive skinny bundles.
Ultimately, spending wiser is not just about reducing costs. It is about building resilience to changing technologies and patterns of consumer behavior, it is about adopting scalable, modular architectures that deliver value well into their lifecycle, and it is about embracing innovation to create differentiation by offering superior customer experience. So, while we are always happy to have conversations at trade shows such as IBC about the importance of spending less, the real conversation underlying it is really about the importance of spending wiser.
